LIVE MARKETS-Revolving debt growth accelerates as saving rate hits multi-year low
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CONSUMER CREDIT: REVOLVING DEBT GROWTH ACCELERATES AS SAVING RATE HITS MULTI-YEAR LOW
Consumers, who shoulder about 70% of the U.S. economy, are increasingly putting purchases on plastic (and dipping into savings) in order to make ends meet.
Late Friday, the Federal Reserve released its outstanding consumer credit report USCRED=ECI, which showed American consumers increased their debt by $20.73 billion in April.
That's down 6.7% from March but 15.2% north of consensus.
Peeking under the hood, the net drop was due to a 23.5% deceleration in non-revolving credit, which grew by $9.1 billion versus the prior month's $11.9 billion increase.
But revolving credit, which includes credit card debt, accelerated, rose by $11.6 billion, or a 14.9% acceleration from March.
There's been growing chatter among economists about the increasingly K-shaped economy - in which wealthier Americans (i.e., stockholders) are enjoying boom times, while consumers at the lower end of the scale are suffering a cost-of-living squeeze.
Evidence of that squeeze can be found nearly everywhere you look: in survey data, showing plunging consumer expectations. It can be found in the Commerce Department's PCE report, which showed the saving rate dropping to 2.6% of disposable income, the lowest it's been since June 2022, and a 10.8% annual growth of total revolving credit outstanding.
And while recent retail sales numbers suggest healthy consumer spending, much of that is happening at the gasoline pump.
(Stephen Culp)
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